States demand compensation for Pay Commission Award

New Delhi: Several states, in their pre-budget meeting with Union Finance Minister Arun Jaitley on Saturday, pressed for Centre compensating for the implementation of the Seventh Pay Commission report as states too will have to provide a similar hike to their employees like central government employees.

The Seventh Pay Commission headed by Justice A K Mathur in November recommended increase in remuneration of about one crore central government employees and pensioners which is estimated to impose an additional burden of Rs 1.02 lakh crore in 2016-17.

The Seventh Pay Commission recommended for raising minimum pay of central government employees to Rs 18,000 per month from current Rs 7,000 while the maximum pay, drawn by the Cabinet Secretary, has been fixed at Rs 2.5 lakh per month from current Rs 90,000. For the Secretaries it has been fixed at Rs 2.25 lakh as against Rs 80,000 currently.

The pay commission award will come into effect on January 1, but it is likley to be implemented after budget and employees will be paid arrears.

State governments usually adopt the recommendations of every Central Pay Commission after suitable modifications. The commission award tends to impose a significant burden on state governments finances.

Although higher salaries will mean more disposable income in the hands of government employees, the pay commission award could burden the state governments finances and push back the fiscal recovery.

“The committed liabilities of States will increase and so the Centre should give use some assistance or at least compensate us for a part of the pay hikes,” said Abdul Bari Siddiqui, Bihar Finance Minister, adding that the State has also sought a special category status.

“As far as central government is concerned we would like to cooperate with every state, and as the growth of states increases, the national growth will also increase,” Finance Minister Jaitley said in his opening remarks.

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